A recent California Appellate Court decision reviewed the provision in many California Association of Realtor form agreements that require mediation prior to filing any lawsuit in order for a prevailing party to receive attorneys’ fees. Silver Horse Equities, LLC v. Ahmad displays why it’s important for parties to read the agreement fully prior to filing any lawsuit.

In Silver Horse Equities, LLC v. Adhmad, Landlord and Tenant entered into a residential tenancy using a California Association of Realtors’ form lease. Monthly rent was $9,260 for the first three years of the Lease and $10,500 after the third year. Tenant vacated the home four months prior to the three year lease terminating. In response, Landlord filed a lawsuit for breach of lease for the rent that was still due under the Lease.

After a bench trial, the trial court awarded Landlord damages of $27,742.20 after offsetting damages by the $19,000 security deposit. Landlord’s attorney filed a Motion for Attorneys’ Fees seeking $166,511.22 in fees. The trial court awarded Landlord $95,197.50 in attorneys’ fees along with costs. Tenants appealed finding that Landlord failed to mediate the dispute prior to filing any lawsuit.

Prior to filing the lawsuit, there were a number of e-mails between attorneys for both the Landlord and Tenant attempting to set a mediation. After many e-mails, Tenant’s attorney failed to respond to Landlord’s attempts to mediate, and Landlord set a deadline to schedule a mediation. Because Tenant never responded, Landlord filed the lawsuit. The Appellate Court found that the Landlord had made attempts to schedule a mediation but Tenant failed to respond in a timely manner. Thus, Landlord was entitled to its attorneys’ fees as the prevailing party in the lawsuit.

This case displays the importance of mediation in disputes prior to filing any lawsuit. The California Association of Realtors’ forms require that mediation be sought by any party prior to filing any lawsuit except for a few reasons (i.e., unlawful detainers, probate matters). As shown in this case, attorneys’ fees can sometimes substantially outweigh whatever damages are being sought, so they can be an important part of any lawsuit.

Please contact Attorney Anthony Marinaccio at 818-839-5220 for more information regarding real estate disputes.